If the company responsible for your asbestos exposure filed for bankruptcy, there are still ways for you to claim compensation. This may be true even if it’s been decades since you worked there or decades since the company went bankrupt.
This is a common scenario, as many companies were forced into bankruptcy by the number of lawsuits they faced. For victims, it’s also common that by the time they receive a diagnosis (decades later), the company has changed hands, reorganized, or shut down entirely.
Thankfully, special legal systems were established to allow for bankruptcy, asbestos lawsuits, and support victims.
We know this can be overwhelming, but we aim to make things easier with this guide. If you have any questions, we also welcome you to contact our asbestos and mesothelioma lawyers for a free consultation.
How Bankruptcy Affects Ongoing Mesothelioma or Asbestos Lawsuits
When a company files for Chapter 11 bankruptcy, it triggers an automatic stay under Section 362 of the Bankruptcy Code. This immediately pauses all ongoing asbestos or mesothelioma lawsuits against it.
But pausing doesn’t end all hope. The law also protects the company’s assets for a fair distribution among creditors, including asbestos victims.
Instead, these pending claims will often be redirected to asbestos trusts, which are structured to compensate victims.
Asbestos Trust Funds as an Alternative Source of Compensation
As mentioned, to prevent victims from being left empty-handed by bankrupt companies, laws were set up in the 1980s to transfer company assets to asbestos trust funds.
Today, there are around 60 active asbestos trust funds. This law was enacted in response to the growing number of asbestos lawsuits that forced many companies into bankruptcy.
Unlike lawsuits, trust fund claims are handled administratively, with no trial or jury. Claims are reviewed based on medical diagnosis and evidence of asbestos exposure (such as employment history). If these requirements are met, compensation is awarded in accordance with the preset trust guidelines.
Although payouts tend to be lower than those from a lawsuit, many trust fund payouts conclude much more quickly and can help address the bankruptcy dilemma.
If you want to gain compensation from a company you once worked for that has gone bankrupt, you can contact an asbestos claims lawyer to help you file a claim with a trust fund.
Who Can File an Asbestos Trust Fund Claim?
To make an asbestos trust fund claim, your claim must include:
- Documentation stating that you or a family member has been diagnosed with an asbestos-related disease.
- A physician’s statement that confirms your diagnosis.
- Evidence of the location where you or a family member was exposed to asbestos, such as a place of employment.
- Medical records that link the exposure to your or a family member’s current diagnosis.
Multi-Defendant Lawsuits and Bankruptcy
For many victims, their asbestos exposure may have come from multiple sources. For example, if you worked across multiple jobs or job sites.
If that applies to you, you can make multiple trust fund claims and a lawsuit against any other companies that remain solvent.
This approach can allow you to pursue the maximum possible compensation for your case and is particularly suitable if you face long-term toxic work exposure.
This is a common situation for people working in:
- Construction and industrial
• Shipyards and power plants
• Manufacturing environments
• Military service and government facilities
What Legal Options Do I Have When Facing a Bankrupt Asbestos Defendant?
In asbestos bankruptcy lawsuits, timing and strategy are critical.
Depending on your circumstances, your legal options may include:
- Filing a claim with one or more asbestos trust funds.
- Pursuing claims again.
- File a lawsuit against solvent co-defendants.
- Coordinating filings to avoid conflicts or delays.
- Preserving rights under state-specific deadlines.
Each trust fund and state has its own rules and deadlines, some of which require detailed work investigations. Others rely on product identification or medical records. As these requirements vary, claims are often evaluated individually to determine the optimal route of action.
As each case is unique, we strongly advise you to contact a Bankruptcy asbestos lawyer for case-specific advice.
How Bankruptcy Affects Compensation and Claim Value
Compensation from asbestos trust fund claims is typically set as a percentage of the claim’s total value, to ensure funds remain available for future claimants. Therefore, individual payouts may be lower than what a jury might award at trial.
Note, however, that the payout you could receive varies with each trust. Most trusts pay 5% to 15% of a claim’s value, but it can be higher.
For this reason, it can be advised to explore the possibility of also filing a lawsuit against any other at-fault companies, such as other employers, that you worked with in the past. When combined, multiple lawsuits can still result in meaningful compensation.
Bankruptcy and Asbestos Recap:
- Laws from the 1980s forced bankrupt companies to set up trust funds that serve to compensate asbestos victims.
- Many of these trust funds are still active today and can be used against the debtor, even decades after the exposure and bankruptcy.
- If you filed a lawsuit against a company that has since filed for bankruptcy, it will be paused. You will need to file against the trust fund instead, once it has been set up.
- You can always file claims and lawsuits against multiple companies and trust funds.
- Most trust funds pay between 5% to 15% of a claim’s value.
- Speaking to an experienced Bankruptcy asbestos lawsuit lawyer can help you understand how to move forward.
How Shrader & Associates, L.L.P. Helps Clients Navigate Bankruptcy in Asbestos Cases
At Shrader & Associates, L.L.P., our experience and expertise in handling asbestos cases nationwide position us well to handle claims involving bankrupt companies.
With decades worth of evidence and information already collected, we have a head start in identifying all the potential sources of compensation to help you receive the maximum possible payout.
We also understand the emotional strain on you and your family in the wake of a diagnosis and work hard to take the legal burden off you. From paperwork and financial planning to stressful negotiations, we aim to let you focus on time with your family.
We welcome you to contact us today for a free consultation, where we can clarify what’s possible with your case and find a strategy to win the money you deserve.
Frequently Asked Questions
Can I recover asbestos compensation if a company has gone bankrupt?
In many cases, yes. Many companies were required by law to establish asbestos trust funds before filing for bankruptcy. Today, there are around 60 active trust funds that still pay claims. Plus, you may also be able to file a claim against another active company, depending on your circumstances.
How long does an asbestos trust fund claim take to process?
Sadly, there is no default answer to this question. Some claims move very quickly in just a matter of months, while more complicated cases can take far longer. Generally, it depends on the complexity of your exposure history and the documentation available.
Does bankruptcy affect asbestos wrongful death claims?
Yes, but it doesn’t end the right to compensation. Instead, the surviving family will likely need to claim from the trust fund.